US-Turkey Trade Tension in Focus with UK Inflation & US Retail Sales in the Spotlight

Daily Update - 15th August 2018

Yesterday’s Market

• Germany Harmonized Index of Consumer Prices & Euro Zone GDP
• GBP Average Earnings including & Excluding Bonus UK

Yesterday’s Focus

The GBP/USD pair extended its losses in the NA session and touched its lowest level since late June of 2017 at 1.2704. Yesterday's data from the UK showed that the unemployment rate fell to its lowest level in 43 years at 4% in June from 4.2% in May. However, the sterling failed to take advantage of that data as the number of unemployed increased 6.2K in July to come in worse than the market expectation of 3.8K. In the meantime, British foreign Secretary Hunt said that the risk of a no-deal Brexit was increasing and added that everyone needed to be prepared for a chaotic atmosphere if that were to materialize.

Germany and the EU published preliminary Q2 GDP figures, up 0.5% and 0.4% respectively, both slightly above the market's forecast. The ZEW confidence survey indicated that business sentiment improved in August, although the readings held well below average and within negative readings. For Germany, Economic Sentiment resulted at -13.7, improving from the previous -23.7, while for the whole EU, it printed -11.1 vs. the previous -18.7. The US released Export and Import prices for July,  both down monthly basis but sharply up when compared to a year earlier.

 

Today’s Market

• GBP UK CPI report, Core CPI & Inflation Report
• USD Retail Sales US ex Autos

Today’s Focus

For the EUR, there are no material stats scheduled for release through the morning to provide direction, leaving the EUR in the hands of contagion risks from Turkey and the U.S – China trade war, with Tuesday’s stat out of Germany and the Eurozone having provided limited support on the day.

For the Pound, it’s yet another big day ahead, with key stats scheduled for release out of the UK including July inflation figures.

Following the most recent BoE press conference and general sentiment towards Brexit, a pickup in the annual rate of inflation could reignite talks of another BoE rate hike before the end of the year, though the lack of progress on Brexit may leave any Pound rally on hold near-term as a no deal scenario continues to be a possible outcome.

Across the Pond, stats are on the heavier side, with key stats through the day including July retail sales and industrial production figures, 2nd quarter nonfarm productivity and unit labour cost numbers and June business inventory numbers.